Key takeaways:

• A German court found Adidas guilty of vague climate claims without defined pathways or offset disclosures.
• Experts warn of “greenhushing” but encourage clearer communication.
• New legal challenges and scrutiny around sustainability marketing and reporting are emerging.

Adidas maintains standard best practices to reduce its contributions to the climate crisis, including grounding net zero targets in science. However, that didn’t stop the company from losing a greenwashing lawsuit. On March 25, the Nuremberg-Fürth Regional Court in Germany found Adidas guilty for failing to detail how it would achieve “climate neutrality” by 2050.

Despite the lack of a fine, the bad press for Adidas brings repercussions for other companies advertising climate goals. The suit uniquely targeted a broad, long-term ambition that underpins an overarching corporate sustainability strategy, rather than a specific product claim.

“It is a warning shot for other textile companies to make sure they can substantiate their claims and to move away from vague terminology,” said Richard Wielechowski, senior analyst at Planet Tracker in London. “There is a challenge here in that brands that are trying to do something and talking about it are the ones risking being hit with litigation, whilst those doing nothing get ignored. This might encourage greenhushing.”

Such rulings bring cons and pros for corporate sustainability work, according to Suzanne Shelton, senior partner at ERM Shelton, in Knoxville, Tennessee. “I worry companies will get demotivated from doing the arduous, trailblazing work of decarbonizing, and maybe we’re not giving enough grace for companies to find their footing and communicate as they go,” she said.

“On the other hand, we do need to communicate with consumers in a crystal clear way – our data has shown for years that nobody likes to find out that environmental claims that played a role in their decision to purchase were misleading (it’s damaging to brands).”

Deception or imprecision?

Environmental Action Germany, or Deutsche Umwelthilfe (DUH) filed the suit last fall, accusing Adidas of deception. “Companies may not simply communicate sustainability goals (or climate neutrality targets) without explaining how they intend to achieve them,” said Agnes Sauter, DUH head of ecological market surveillance. “The ruling shows that transparency and comprehensible plans for how sustainability goals are to be achieved are essential to create trust and to ensure legal compliance.”

Adidas shared a statement with Trellis: “The decision relates exclusively to a specific wording on our website, which we already adjusted in August 2024.”

The Herzogenaurach, Germany-based brand has not altered its plans to reduce emissions. “Progress is already clearly visible: since 2022, absolute emissions including the supply chain have fallen by 20 percent,” the Adidas spokesman added.

Adidas is among 500 apparel companies with third-party approval by the Science-based Targets initiative for a net zero target. The company aligned that 2050 deadline with an ambitious, Paris Agreement level of a 1.5 degrees Celsius rise in global temperatures.

The specific legal complaint was that Adidas failed to define “climate neutrality” or admit to using offsets.

A year-old Adidas web page about its 2023 environmental impacts now addresses both issues by defining “climate neutrality” as a concept that may balance “residual emissions with emission removals as well as accounting for regional or local bio-geophysical effects of human activities.”

Adidas discloses emissions steps

Adidas’s 2024 annual report, issued March 5, does not prominently mention “climate neutrality.” It does, however, detail activities to meet net zero across Scopes 1, 2 and 3 by 2050. That goal includes a 42 percent reduction in indirect Scope 3 pollution by 2030 over 2022 levels, and a 70 percent drop for both Scope 1 direct emissions and Scope 2 energy emissions.

Scope 3 is a special focus for Adidas, whose energy-intensive upstream activities create 87 percent of overall climate emissions. Progress there hinges upon encouraging suppliers to adopt renewable energy and abandon coal-fired boilers. To that end, more than half of the brand’s direct suppliers or subcontracting suppliers had made energy upgrades by the end of 2024.

As for efforts to use lower carbon materials, Adidas sources 99 percent of its main material, fossil fuel-based polyester, from recycled sources. By 2030, it plans to derive 10 percent of its recycled polyester from used textiles. Upcycled marine plastic waste, including fishing nets, is a major source today.

Beware making ‘aspirational’ sustainability claims

Experts note that more legal challenges to insubstantiated expressions of ambitious climate goals may increasingly emerge, especially if the European Union’s Green Claims Directive becomes regulation as expected later this year. Already in January, the E.U. Corporate Sustainability Reporting Directive (CSRD) began requiring companies to share their climate transition plans or provide reasons for why they have not. 

“The same types of cases as the Adidas case are happening in the United States,” said Katie Bond, partner at the Keller and Heckman law firm in Washington, D.C. “There are, for instance, several prominent cases on so-called “aspirational” claims and there are lots of cases on carbon-related claims.”

A leading example of aspirational claims comes from a 2023 challenge, by an arm of the nonprofit BBB National Programs, to meat giant JBS Holdings of Greeley, Colorado. In response, the company modified language about a “Global Commitment to Achieve Net-Zero Greenhouse Gas Emissions by 2040.” The new language replaced “commitment” with fuzzier terms, such as “ambition” and “goal.”

JBS had also made claims such as, “We’re setting time-bound, science-based targets and backing them up with $1 billion in capital over the next decade.” The New York Attorney General filed suit against the revisions. In January, however, the court dismissed, “finding that without the “commitment language,” the issue seemed to be resolved,” Bond said.

Meanwhile, cases over “carbon neutral” claims have attacked Delta, Evian, Apple and Clif Bar. It remains to be seen how these will fare, but companies can reduce risk by explaining exactly what they mean by “carbon neutral” or “carbon negative,” according to Bond.

In fashion, fits and starts for greenwashing challenges

Fashion brands have withstood high-profile greenwashing challenges in recent years. A judge last summer dismissed a class action lawsuit against Nike for its “Move to Zero” initiative and claims about sustainable materials.

Two separate 2022 class action lawsuits, in New York and Missouri, challenged the language in H&M’s “conscious choice” collection. The cases ultimately fizzled out, but companies should learn from them what wording and substantiation helped H&M’s defense, according to attorney Bond.

“In H&M in particular it seemed to make a difference that the company labeled its clothing “more sustainable” and explained why, versus claiming that its clothing is across-the-board ‘sustainable,’” she said. “I think compliance lawyers like me have been saying for a long time to be wary of ‘big’ claims like ‘sustainable’ and ‘eco friendly.’”

Meanwhile, the U.S. Federal Trade Commission has been working behind the scenes to make the first updates since 2012 to its Green Guides. Corporate legal teams, and activists, follow the guides to gauge the potential liability of businesses’ environmental claims. The guides are expected to refresh in the next few years, if not sooner.

“I’m afraid the sustainability communications sector has been the Wild Wild West for a long time, and most generalist ad agencies simply don’t realize they’re overstating claims when they do,” Shelton said. “So it is important for regulators to get guard rails in place, as is happening in both the E.U. and U.K., and for companies and their comms agencies to get the message that sustainability is no place for hyperbole.”

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Key takeaways

• The new targets cover the seafood sector only.
• They offer companies a structured way to address ocean sustainability and align their operations with scientific thresholds.
• Expanding engagement beyond seafood, into shipping, logistics and manufacturing, will further strengthen business resilience and ocean health.

The Science Based Targets Network (SBTN) has launched the first-ever ocean science-based targets, focusing initially on the seafood sector. This milestone completes SBTN’s initial suite of nature-related targets, alongside those for land and freshwater, and provides a structured, scientific framework for companies to address their ocean impacts.

For sustainability teams facing growing regulatory and investor scrutiny, adopting these targets will signal a commitment to improve biodiversity while addressing risks to global supply chains.  

Why this matters 

Continued overfishing, habitat destruction and biodiversity loss threaten both marine ecosystems and business resilience. Seafood providers, pharmaceutical companies and many other industries source directly from the ocean, and marine transportation is essential for worldwide trade. More than 80% of global trade by volume is transported via maritime shipping.

Despite these material risks, there is a dearth of corporate ocean commitments — especially those that go beyond blue carbon (i.e., carbon stored in marine ecosystems) to include biodiversity. SBTN’s new targets provide a pathway to bridge that gap, offering companies a structured way to address ocean sustainability and align their operations with scientific thresholds, ensuring long-term viability while mitigating reputational and regulatory risks.

“With the first ocean science-based targets for seafood, companies now have a globally recognized framework to scale action across land, freshwater and ocean,” said Erin Billman, executive director of SBTN. “These targets help companies move beyond incremental change, strengthening marine ecosystems, supply chain resilience and long-term viability.” 

What’s included 

Developed under the leadership of World Wildlife Fund and Conservation International — with input from key industry stakeholders like Sustainable Fisheries Partnership and the Aquaculture Stewardship Council — the targets were piloted in 2024 by four companies with materiality in the ocean and seafood systems, including Danish aquaculture company Musholm A/S and Orkla Foods in Sweden.

Following a public consultation, SBTN refined its approach to cover three key goals for companies in the seafood and aquaculture sector:

• Avoid and reduce overexploitation: Ensure sustainable sourcing of wild-catch fisheries and reduce reliance on overexploited stocks.
• Protect structural habitats: Address the impact of seafood operations on critical marine ecosystems, such as coral reefs and seagrasses.
• Reduce risks to marine wildlife: Mitigating risks from fishing and aquaculture practices on vulnerable marine species.

Each target includes multiple pathways for action, ranging from direct operational changes to engagement in jurisdictional and ecosystem-based initiatives. For example, a company sourcing wild-catch seafood may set a target such as: “By 2030, we will reduce sourcing of Atlantic blue marlin by 13 percent compared to a 2025 baseline.” 

This ensures that overexploited stocks have time to recover while promoting sustainable practices.

An advance, but more is needed

The new targets represent a major step forward for corporate ocean action but only scratch the surface. Starting with fisheries makes sense. At the same time, many other industries also depend on healthy marine ecosystems. For example, pharmaceuticals and agriculture rely on marine resources, and marine-derived compounds are used in medicines and skincare. Fishmeal, meanwhile, is a key ingredient in animal feed. 

Ensuring that these sectors recognize their role in ocean stewardship will be key to long-term success.

The ocean is also an emerging source of sustainable materials, such as seaweed-based plastic alternatives that could transform packaging and reduce dependence on fossil fuels. If marine ecosystems continue to decline, new opportunities will be be lost, fueling materials shortages and increasing costs.

We’ve already seen how fragile supply chains are when ocean access is restricted. The Ever Given blockage in 2021 delayed $9.6 billion in goods per day when a container ship ran aground and blocked the Suez Canal, and Red Sea attacks by Houthi forces have forced costly rerouting since 2023. While these disruptions resulted from physical blockages, marine ecosystem collapse could create similar risks at a systemic level.

SBTN’s targets lay a strong foundation, and expanding engagement beyond seafood, into shipping, logistics and manufacturing will further strengthen business resilience and ocean health.

What’s next

Companies in the seafood and aquaculture sector can now begin setting their own ocean-related science-based targets. Early adopters will not only position themselves as sustainability leaders but also gain a head start in regulatory alignment and supply chain resilience.

But for ocean sustainability to be truly effective, other industries beyond seafood producers must be held accountable as well. There’s growing recognition that investors and industry leaders can play a critical role in expanding targets beyond fisheries and creating a clear business case for broader ocean stewardship. The economic risks of ignoring ocean sustainability — disrupted supply chains, increased insurance costs for marine transport, loss of biodiversity affecting raw material availability — are too significant to overlook.

For more information, or to express interest in setting seafood science-based targets, visit SBTN’s Ocean Hub page.

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Key takeaways:

• B Lab published the seventh edition of the Certified B Corp standard.
• The update raises the certification bar for companies with more than 1,000 employees or $350 million in sales.
• Certified companies will need to demonstrate improvements against baselines to keep their status.   

B Lab Global published a 683-page revision to the B Corp certification standards that requires companies to meet minimum performance thresholds across seven environmental, social and governance topics and commit to continuous improvement after certification.

The sweeping overhaul released April 8 was required under the nonprofit’s governance policy and comes after four years of consultation and more than 25,000 feedback comments. 

This seventh edition of the standard raises the bar for participation, as more large organizations seek the designation. It also integrates and recognizes methodologies used by other nonprofits focused on ESG frameworks including the Science Based Targets initiative, the Global Reporting Initiative and Fairtrade International. 

While most of the almost 10,000 Certified B Corp companies are small or midsize organizations, multinationals including food companies Bonduell and Danone, apparel designer Patagonia and cosmetics maker Natura & Co. have earned the certification.

“The goal here is to create a diverse movement of companies across size, industry, revenue and region to prove that stakeholder capitalism is not just profitable but preferable,” said Sarah Schwimmer, co-lead executive of B Lab.

Companies following the stakeholder capitalism model aren’t solely focused on shareholder value, they also recognize the interests of customers, employees, suppliers and communities.

No brushoff for equity and inclusion

The seven topic areas highlighted in the updated Certified B Corp guidelines, winnowed from nine topics in the original draft, include a required focus on justice, equity, diversity and inclusion — an area where many large and well-known U.S. corporations have walked back commitments in the past 12 months. Dropping this policy was never considered during the update process, Schwimmer said. 

“This is a moment for business leaders to step up and continue to hold strong to what business can and should look like,” she said.

Here are the areas where companies must pass minimum performance thresholds to earn Certified B Corp status under the revision:

• Purpose and stakeholder governance, including a well-defined mission statement and a structure that ensures all stakeholders have a voice in environmental and social performance.
• Climate action plan that supports emissions reductions in line with holding global temperature increases to 1.5 degrees Celsius; large companies must have validated science-based targets.
• Human rights strategy that includes processes for preventing negative impacts in their supply chain and taking action when abuses occur.
• Fair work policy that supports fair wages and incorporates worker feedback.
• Environmental stewardship practices, including a focus on using circular economy models to minimize negative impacts.
• Justice, diversity, equity and inclusion principles for both their own workplace and the communities in which they do business.
• Government affairs and collective action, which centers on how the company advocates for policies that create “positive social and economic outcomes”; large companies are required to share country-by-country tax reports.

“In the previous version, companies could achieve certification by overindexing in a few impact areas, potentially offsetting poor performance in others,” said Ashley Orgain, chief impact officer for household cleaning products company Seventh Generation, a Certified B Corp. “The revised standards now require companies to take meaningful action across all impact areas, encouraging a more holistic approach to social/environmental performance. We see this as a positive development for impact and for accountability.”

Extra requirements for large companies

The revision raises the certification bar for large multinational companies, a move made in response to growing calls for B Lab to be more selective in its certification process. 

The nonprofit has already made some concessions. For example, it revoked the B Corp status for ad agency Havas over complaints about its client relationship with fossil fuel behemoth Shell.

At issue for many critics is B Lab’s policy of allowing individual operating businesses of multinationals to certify rather than requiring the entire company to meet the requirements. “There’s a legitimate debate going on about the use of the B Corp logo,” Orgain said.

Dr. Bronner’s, which earned its first B Corp certification in 2015, said in February that it won’t renew its status when it expires in September because of this policy. This is the culmination of a multi-year campaign advocating for a revision. 

The company explained: “While some food, personal care and textile companies certified as B Corps do take responsibility and certify all major supply chains to credible eco-social certifications, including our esteemed partners at Patagonia, they are unfortunately a minority and this is not required by B Lab, most glaringly in the case of large multinational companies and their enormous supply chains.”

Dr. Bronner’s earned the highest B Corp certification rating to date in 2022, with a score of 206.7. Under the current system, the average score of companies completing a B Corp assessment is 50.9 – the minimum for certification is 80.

The revision published this week layers additional requirements for companies as they grow, based on the number of people they employ or revenue (whichever is larger). Companies with more than 1,000 workers and more than $350 million in sales must:

• Publish a time-bound plan to trace environmental and human rights impacts of their highest-raw materials
• Provide data about their gender wage gap
• Include environmental and social performance targets in executive incentives

Continuous improvement required

Current B Corps due to re-certify in 2025 may submit using the sixth version of the standards until June 30; they’ll need to move to the new ones in 2028.

Companies that have never certified under B Corp have until Dec. 31 to certify under the old requirements.

The cost to certify starts with a one-time fee of $150 for companies with less than $500,000 in revenue, along with a $2,000 annual membership. B Lab doesn’t publicly publish the cost for companies with $1 billion in revenue; it depends on the complexity of the business.

“We want as many companies as possible to come with us,” Schwimmer said. “We are giving them this transition period to adapt and learn.”

B Lab anticipates that adoption of the new standards will pick up first in Europe, where the B Corp certification assessment could be used as a framework for companies to comply with the European Union’s sustainability and ESG reporting mandate.

B Corp Certified companies will need to provide performance updates against their baseline during their certification period. Those disclosures will require third-party assurance. The details of that governance are still being finalized, Schwimmer said, and are likely to vary from region to region.

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As a partner at Beatrice Advisors, a multifamily office, I often see investors presume that, to move the needle on environmental impact, they must opt for private investments that wire impact into their ethos. This kind of investing approach can be described as having high “intentionality” – it’s deliberate, purposeful and offers measurable outcomes.

But whether you’re an individual investor, family office or institutional investor, a rational, well-built portfolio needs to include public securities (both equity and bonds), given their historic, attractive long-term returns and liquidity. Yet public securities are considered to have low “intentionality” because owning or not owning shares or bonds primarily affects a company’s cost of capital, capital markets access, and provides some signaling value, with limited ability to drive values-based goals at the company level. 

So are there ways to make investing in public markets more intentional – and to profit from and increasingly nudge green companies to alter the direction of “brown” ones?  

The ‘not in my portfolio’ approach

Let’s start with one unsettling aspect of the impact of investing passively in public securities via ESG metrics and screens: the companies you avoid in your portfolio continue their less beneficial behaviors regardless of your decision to invest. Choosing not to invest in high emitters of greenhouse gases doesn’t make them go away; they continue to exist, and emit GHGs, whether you invest in them or not.

Similarly, if a company sells its worst coal facility, it doesn’t decommission the mine; it sells it to a private operator outside of public markets scrutiny. In some ways, then, investing this way is “greenwashing” your portfolio. Instead of NIMBY, it’s NIMP – not in my portfolio. 

Proponents who subscribe to an ESG exclusionary investment approach will tell you doing so creates market pressure by reducing demand for problematic/offending companies’ shares, increasing their cost of capital and sends signals to management about investor priorities.

But companies can still access capital through other investors or private markets, resulting in a missed opportunity to influence corporate behavior through active ownership. There’s also the risk of pure virtue signaling, without meaningful impact. 

Here’s an example of how ESG exclusionary selection plays out. Consider Travelers Insurance, which produced approximately 2.4 tons of GHG emissions per $1 million of revenue in 2023 and building materials manufacturer Martin Marietta Materials, which emitted 1,430 tons per $1 million revenue. Where is the lowest hanging fruit if one sought to affect GHG emissions? 

If Travelers reduced GHG emissions to zero, it would be the equivalent of just a ~0.1% cut in the emissions of Martin Marietta. Yet prevailing public markets strategy would have you own Travelers and avoid Martin Marietta. It seems logical that the exclusionary ESG investment tends to make brown companies more brown, while green firms really can’t get much greener.

But research by George Serafeim of Harvard Business School, Kelly Shue of Yale School of Management and others suggests that thoughtful engagement with brown companies, backed by meaningful shareholder influence and clear accountability measures, can be more effective than exclusion strategies in driving climate and social progress.

Investing strategies to heighten impact intentionality 

To generate greater intentionality in historically passively-held positions in public securities, a more effective approach may be to invest in brown companies – particularly where there’s a prospect and plan for active influence. This can take the form of strategic engagement with companies via:

• Direct dialogue with management teams on social or climate priorities and implementation plans.
• Proxy voting to support sustainability-focused shareholder resolutions.
• Coalition building with other investors to increase leverage.
• Setting clear milestones and accountability measures for progress.
• Providing constructive feedback and industry best practices.

Effective engagement requires persistent, long-term commitment by you, or your advisors or managers, and should be backed by clear escalation strategies when companies fail to respond adequately. This approach allows investors to maintain economic exposure while actively pushing for positive change.

Another way to invest with more intentionality is to support businesses developing sustainable solutions, by investing in companies focused on renewable energy technologies, energy efficiency solutions, and clean transportation, and/or that cater to narrow wealth-gaps and lack of diverse leadership. If you’re a larger market participant, underwriter or anchor, you can also offer financing for transactional projects that align with your values-based goals.

How to get started

Depending on the size of your portfolio and the level of your involvement, you can work with nonprofits like As You Sow or the Interfaith Center on Corporate Responsibility to leverage their engagement platforms and expertise. Collaborative shareholder initiatives  amplify individual or corporate investors’ influence through collective action. Plus you can access their research, voting recommendations and ready-made shareholder proposals. You can also use their networks to connect with other like-minded investors to share best practices and work with their proxy voting services to ensure your votes align with initiatives you agree with.

You can also hire managers that will engage with brown companies as part of their fund activities, or via a separately-managed account (typically with at least $1 million to invest), for a bespoke portfolio that drives shareholder engagement through your values-based objectives.

Public securities are a large and rational component of any investment portfolio. For investors seeking more intentional outcomes from their liquid investments, these strategies can make intentionality more of a dimmer than a light switch, with an ability to slide for more impact.

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